Mr.Nicolas End

Alexander F. Tieman

Fedor Miryugin

Pietro Dallari

Mr.Seyed Reza Yousefi

This paper investigates the role of tax incentives towards debt finance in the buildup of leverage in the nonfinancial corporate (NFC) sector, using a large firm-level dataset. We find that so-called debt bias is a significant driver of leverage, for both small and medium-sized enterprises and larger firms, with its effect accounting for about a quarter of leverage. The strength of this effect differs with firm size, the availability of collateral, income and income volatility, cash flow, and capital intensity. We conclude that leveling the playing field between debt and equity finance through tax policy reform would decrease NFC leverage, reducing economic risks posited by leverage.

Pouring Oil on Fire: Interest Deductibility and Corporate Debt

Mr.Thomas J Sargent

Mr.George Hall

Mr.Martin Ellison

Mr.Andrew Scott

Mr.Harold James

Ms.Era Dabla-Norris

Mark De Broeck

Ms.Marina Marinkov

Vitor Gaspar

World War I created a set of forces that affected the political arrangements and economies of all the countries involved. This period in global economic history between World War I and II offers rich material for studying international monetary and sovereign debt policies. Debt and Entanglements between the Wars focuses on the experiences of the United States, United Kingdom, four countries in the British Commonwealth (Australia, New Zealand, Canada, Newfoundland), France, Italy, Germany, and Japan, offering unique insights into how political and economic interests influenced alliances, defaults, and the unwinding of debts. The narratives presented show how the absence of effective international collaboration and resolution mechanisms inflicted damage on the global economy, with disastrous consequences.

Debt and Entanglements Between the Wars

Mr.Nicolas End

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